Yongala Holdings Pty Ltd & Ors v; S.S. & M. Pty Ltd & Anor
[2005] FMCA 18
•25 January 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| YONGALA HOLDINGS PTY LTD & ORS v S.S. & M. PTY LTD & ANOR | [2005] FMCA 18 |
| TRADE PRACTICES – Breach of Act – breach of contract – allegations of misleading and deceptive conduct in negotiations for lease – allegations of false representations – fraudulent intention – oral misrepresentation – implied terms of lease – whether representatives were the cause of any loss – whether sufficient evidence to substantiate claim – assessment of damages on counter claim – accrued jurisdiction – breach of terms of lease – burden of proof with evidence relating to allegedly deceitful conduct. |
Trade Practices Act 1974 as amended, ss.4, 51A, 52, 75B(a),(b),(c), 80, 82, 87
Federal Magistrates Act 1999, ss.10(1), 18
Concrete Construction (NSW) PTY LTD v Nelson (1990) 169 CLR @ 604
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Yorke v Lucas (1985) 158 CLR 661 @ 666
Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950 @ 50,378
Gould v Vaggelas (1985) 157 CLR 215
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Briginshaw v Briginshaw (1938) 60 CLR 336
The Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 and 159-160
Helton v Allen (1940) 63 CLR 691
Jones v Dunkel (1959) 101 CLR 298
| First Applicant: | YONGALA HOLDINGS PTY LTD |
| Second Applicants: | GEORGE ARTHUR & JULIE ALBINA VIELLARIS |
| First Respondent: | S.S. & M. PTY LTD |
| Second Respondent: | MATE BULJUBASICH |
| File No: | BRG 436 of 2002 |
| Delivered on: | 25 January 2005 |
| Delivered at: | Townsville |
| Hearing dates: | 22 and 23 March 2004, 8 July 2004 |
| Judgment of: | Coker FM |
REPRESENTATION
| Counsel for the First and Second Applicants: | Mr Pope |
| Solicitors for the First and Second Applicants: | Bruce K. Gillan |
| Counsel for the First and Second Respondent: | Mr Davis |
| Solicitors for the First and Second Respondent: | Vandeleur & Todd |
ORDERS
The application be dismissed.
Judgement for the Respondents on the counter claim and interest in the sum of $184,663.20.
That the Applicant pay the Respondents costs as agreed and failing agreement to be taxed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT TOWNSVILLE |
BRG 436 of 2004
| YONGALA HOLDINGS PTY LTD |
First Applicant
| GEORGE ARTHUR & JULIE ALBINA VIELLARIS |
Second Applicants
And
| S.S. & M. PTY LTD |
First Respondent
| MATE BULJUBASICH |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The first and second applicants in these proceedings are to all intents and purposes one and the same. The first applicant Yongala Holdings Pty Ltd is a company owned and operated by the second applicant. The company is used for the business dealings and operations of the second applicant. A similar situation exists in respect of the first and second respondents. S. S. & M. Pty Ltd is the corporate entity operated by the second respondent in conjunction with his wife, Julie Michelle Buljubasich. Mrs Buljubasich is not a director of the company S. S. & M. Pty Ltd, but in evidence indicated that she was a shareholder.
The first and second applicants commenced proceedings in this Court on 10 December 2002. That application sought Orders as follows:-
the applicants claim against the first respondent is for:
a)damages for breach of Section 51A and 52 of the Trade Practices Act 1974 pursuant to Section 80 of the Trade Practices Act
b)pursuant to Section 87 of the Trade Practices Act the lease agreement entered into between the First Applicant and the First Respondent dated the 16th November 1998, be varied, or alternatively cancelled
c)damages for breach of contract
d)damages for negligence
The application was in fact amended on two further occasions on 11 November 2002 and 6 June 2003. The amended application however did not vary or alter the claim made against the respondents to any significant degree but attachment “B” to the amended application set out the particulars or basis upon which the orders were sought. The final particulars relied upon in the amended application filed 6 June 2003 are as follows:
1.At all material times:
(a)the First Applicant was a company duly incorporated according to law;
(b)the First Respondent was a company duly incorporated according to law;
(c)the First Respondent was the owner of a shopping centre situated on land described as Lot 22 on Registered Plan 900305, County of Nares, Parish of Johnstone in the State of Queensland;
(d)The Second respondent is a Director of the First Respondent
2.By an Instrument of Lease commencing on the 1st day of June 1998, the First Respondent leased to the First Applicant part of the ground floor and part of the first floor and part of the first floor of the building on the land, which was delineated on a plan attached tot he lease.
3.The part delineated was a bar and a restaurant.
4.The lease was for a term of five years, expiring on the 31st may 2003.
5.Clause 2.2 of the lease provided:
“Annual Rent Increases
(1)The Annual Rent payable for the first Lease Year is an amount of SIXTY FIVE THOUSAND DOLLARS ($65,000.00).
(2)The Annual Rent will be increased in each subsequent Lease Year by an amount of TEN PERCENT (10%) per annum.”
6.The Second Applicants guaranteed the due performance of the covenants of the lease by the First Applicants.
7.In order to induce the first Applicant to enter into the lease, the second Respondent on his own behalf and on behalf of the First Respondent, represented to the Second Applicants on behalf of the First Applicant:
(a)that Woolworths were going to the anchor tenant in the shopping centre;
(b)that with the exception of a coffee ship to be operated by the First Respondent or Second Respondent, the First Applicant would be the only food outlet in the shopping centre;
(c)that a lift would be operational within twelve weeks of the applicants entering into the lease;
(d)there would be wheelchair access
(e)that entrance to the upstairs restaurant would be made secure so as to prevent unauthorised or unlawful entrants
Particulars:
(a)the representations were oral;
(b)the representations were made by the Second Respondent to the Second Applicant, George Viellaris;
(c)the representations were made in March prior to the lease being entered into;
(d)the representations were made in the Second Respondent'’ office upstairs in the Grand Central Complex;
(e)the substance of the representations appears in paragraphs 7(a) to (e) hereof.
8.In reliance on the representations, the First Applicant entered into the Instrument of Lease and the Second Applicants guaranteed the performance of the first Applicant of its covenants under the lease.
9.In making the representations, the Second Respondent on his own behalf and on behalf of the First Respondent warranted the truth of the representations.
10.The representations:
(a)were the consideration for entering into the Instrument of Lease;
(b)further or alternatively were collateral to the Instrument of Lease
(c)further or alternatively formed part of the Instrument of Lease
between the First Applicant and the first Respondent
11.The representations were false, in the:
(a)Woolworths is not and has never been the anchor tenant in the shopping centre;
(b)After the First Applicant entered into the lease the First Respondent leased other sections of the shopping centre to food outlets;
(c)The lift was not operational within 12 weeks of the lease being entered into;
(d)Wheelchair access was not supplied for over 12 months;
(e)The restaurant was never made secure from unauthorised or unlawful entrants.
12.In making the representations, the First Respondent engaged in conduct which was deceptive or misleading.
13.The representations were made in the course of trade or commerce.
14.In the premises, the first Respondent is in breach of Section 52 of the Trade practices Act 1974 as amended.
15.In making the representations, the Second Respondent was, pursuant to section 75B(a),(b) and (c) of the Trade Practices Act, a person involved in the contravention of Section 52 of the trade Practices Act.
16.The representations that Woolworths were going to be the anchor tenant in the shopping centre and that a lift would be operated within twelve weeks of the Applicants entering into the lease, were made negligently.
Particulars
(a)Woolworths were not the anchor tenant or committed to be the anchor tenant at the time the representations were made;
(b)There were no basis for the representations that the lift would be operational within twelve weeks of the Applicants entering into the lease
17.In breach of contract:
(a)Woolworths were not the anchor tenant or committed to be the anchor tenant at the time the representations were made;
(b)The First Respondent has leased other areas of the shopping centre to food outlets;
(c)The lift was not operational within twelve weeks of the commencement of the lease;
(d)Wheelchair access was not available for over twelve months;
(e)The restaurant was never made secure from unauthorised or unlawful entrants.
18.But for the representations, the first Applicant would not have entered into the Instrument of Lease and the Second Applicants would not have guaranteed the First Applicant’s performance of the covenants under the lease.
19.By reason of the First Respondent’s breach of the Trade Practices Act, breach of contract and negligence, the First Applicant has suffered loss and damage
(c) That the First Applicant has lost income and expended monies that they would not have otherwised expended. See schedule A
20.The first Applicant vacated the premises on the 30th June 2002 by reason of poor trade.
A response was filed on 6 November 2002 and a number of the matters contained therein lead to the filing of the amended applications. An amended response and cross-claim was then filed on 4 August 2003.
The claim as detailed in the amended application is framed under three possible heads, either:-
(a)Under the Trade Practices Act 1974 as amended:
(b)Negligent misstatement: or
(c)Breach of Contract
It was acknowledged by Counsel for the applicant in submissions however, that this matter rose and fell as a case relating to an alleged breach of the Trade Practices Act. Section 52 of the Trade Practices Act provides:
“Misleading or deceptive conduct
(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of the Division shall be taken as limiting by implication the generally of subsection (1).”
Concessions were made by Counsel for the respondents in these terms:
(a)The first respondent is a “corporation”(s.4 TPA);
(b)In the context of the case, if the representations alleged to have been made were made in the circumstances alleged then they would have been made “in trade or commerce” (Concrete Construction (NSW) PTY LTD v Nelson (1990) 169 CLR @ 604);
(c)Any representations found to be made by the second respondent would have been made of behalf of the First Respondent (s.84 TPA);
(d)Any pleaded representation made by the second respondent would, if a cause of action otherwise arose under ss.52 and 82 TPA, render the second respondent liable as a person “involved in the contravention” (s.75B TPA).
The law relating to Section 52 at least insofar as it is relevant to these proceedings is as follows:
(a)There must be conduct which contains or conveys a misrepresentation (Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177);
(b)Which representation is deceptive or misleading. Fraud is not an element (Yorke v Lucas (1985) 158 CLR 661 @ 666);
(c)There must be reliance upon the misrepresentations (Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950 @ 50,378). Here that reliance is said, it seems, to be entering into the lease and guarantees;
(d)The representation need not be the only factor relied upon, as long as it is one of the considerations relied upon and it is causative (Gould v Vaggelas (1985) 157 CLR 215 and Wardley Australia Ltd v Western Australia (1992) 175 CLR 514);
(e)As a result of the conduct and reliance, there must be loss (Wardley Australia Ltd v Western Australia (1992) 175 CLR 514).
(f)That loss is compensated for under s.82 TPA, by way of damages. Section 82 provides:
“Actions for damages
(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued”.The application makes a claim for damages for breach of Section 51A of the Trade Practices Act 1974 as amended. Section 581 is in the following terms:
“Interpretation
(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in the division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.”
In this matter however, there is no claim by the respondents that there are reasonable grounds for the making of any representations, as alleged. The case of the first and second respondents is simply to the effect, that the representations, were not made. The issue therefore for determination by this Court is one simply of consideration of the evidence before the Court and decision as to whether the representations or any of them, were made. If it is found that the representations were made, then a determination is required as to whether there was reliance placed upon the representations and if reliance were placed upon the representations, then it is necessary to determine what damages flow and what other relief if any, is appropriate.
As necessary, later in these reasons I will address issues in respect of the question of damages. It is submitted on behalf of the respondents however, that there is no basis upon which damages, in any event, can be assessed, because there are no pleadings as to the true value of the rental that could or should have been paid, in relation to the property, the subject of the lease, as opposed to the rental agreed to be paid. There is certainly strength in this particular submission and it is a matter that has troubled me. The fact is, that there is no evidence what-so-ever of what a proper or true market rental should have been. There must be a clausal connection between the alleged conduct and the loss. In this case however, there is no evidence upon which the Court could properly assess the loss and make an award.
What is contended for the applicants, is that they were induced by representations to enter into an agreement for lease, which required them to pay a rental above and beyond what was reasonable or proper, in these circumstances. However, there is no evidence provided by the applicants as to what would be a market rent, nor is there any causal link or connection between the alleged representations and a trading loss, caused by a rental over and above what was proper, in all the circumstances.
As I indicated earlier, the submissions made on behalf of the applicant indicated that this matter was, notwithstanding the terms of the pleadings, a trade practices case. That clearly is correct, because claims in relation to negligent misstatement must rise and fall, at least to a significant degree, on whether the representations alleged to have been made are proved. If all that is proved, then a claim pursuant to the provisions of Section 52 of the Trade practices Act 1974 as amended, would of itself, be made out.
Insofar as the breach of contract is alleged, it is clear that what was suggested in relation to such a claim, was that any representations alleged to have been made, have in fact, of themselves, become contractual terms. The issue therefore, would be whether the parties intended the representations to have contractual force. The point is in any event, not pursued in relation to the matter, but in my view that is understandable, in light of the fact that there is a separate and entire document which details the terms of the agreement, between the parties. That document is the lease. The lease, is on its face an entire agreement and does not give rise to any suggestion of an intention for there to be additional terms, over and above those contained within the lease. More particularly, and perhaps most significantly however, the lease contained an entire agreement clause. Clause 17.2 of the lease is relevant in that regard and though exclusion clauses may not, depending on the circumstances, prevent a cause of action arising under the Trade Practices Act, they will prevent any alleged misrepresentation becoming contractual terms.
As indicated therefore, the real claim ultimately turns on whether the Trade Practices action succeeds or not.
The claim for damages, as detailed in the amended application, totals $108,968.00. This comprises losses claimed in the sum of $85,914.00 and a further claim for $23,054.00, relating to furniture, fixtures and the like. It is submitted on the part of the respondents, that the second claim in relation to furniture and fixtures is a meaningless claim, in that there is simply provision of a list of furniture and fixtures with values attributed to them but no evidence what-so-ever to explain or to support the claim, for a sum of $23,054.00. To a significant degree, I agree that that is the case, though there certainly was evidence given of the theft of chattel items, including tables, chairs and the like and damages caused to same as a result of them remaining outside secure areas, within the restaurant. What is clear however is that there is not one scrap of evidence in relation to the value of such items, nor is there any evidence of any liability whatsoever, attaching to the respondents in relation to those items of property. That element of the claim must obviously fail.
The amended application deals also with the issue of remedial orders. It provides specifically for a claim to the effect, “the lease agreement entered into between the first applicant and the first respondent, dated 16 November 1998, be varied, or alternatively cancelled.”
Section 87 of the Trade Practices Act provides as is relevant, as follows:
“Other orders
(1) Without limiting the generally of section 80, where, …the Court find that a person who is a party to the proceedings has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in … in contravention of a provision of Part V … the court may, whether or not it … makes an order under section 82 … make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention ( including all or any of the orders mentions in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage(2)The orders referred to in subsection (1) … are:
(a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on an after such date before the date on which the order is made as is specified in the order;
(b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date before the date on which the order is made as is so specified; (ba) an order refusing to enforce any or all of the provisions of such a contract;
(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;
(g) an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to execute an instrument that:
(i) varies, or has the effect of varying, the first-mentioned instrument; or
(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first-mentioned instrument.
There is no indication given as to what variation might be contemplated. The thrust of the evidence however, and the submissions that were made on behalf of the applicant, would indicate that the relief really sought by the applicant is not variation of the agreement, but rather, that the applicants be relieved from payment of any rental, which is the subject of the counter claim, brought by the respondents. Other than that, the relief sought is the repayment to the applicants of monies paid to the respondents in respect of the lease. No other real benefit could be seen in variation of the lease or of its terms, particularly in light of the fact, that the applicants have long vacated the property and there would appear to be no real likelihood whatsoever, of continued financial dealings between the applicants and the respondents.
As indicated, there is a counter claim in relation to the action and the respondent’s counter claim, is a claim for outstanding rent and damages. This would not normally fall within the jurisdiction of the Court. Section 10(1) of the Federal Magistrates Act 1999 provides:
10(1) [Original jurisdiction] The Federal Magistrates Court has such original jurisdiction as is vested in it by laws made by the Parliament:
(a)by express provisions; or
(b)by the application of section 15C of the Acts Interpretation Act 1901 to a provision that, whether expressly or by implication, authorises a civil proceeding to be instituted in the Federal Magistrates Court in relation to a matter.
However, there is no doubt that the court has accrued jurisdiction to hear the counter claim. In particular, Section 18 of the Federal Magistrates Act 1999 provides for jurisdiction is associated matters. Section 18 is in these terms:
18 To the extent that the Constitution permits, jurisdiction is conferred on the Federal Magistrates Court in respect of matters not otherwise within its jurisdiction that are associated matters in which the jurisdiction of the Federal Magistrates Court is invoked.
I will address issues in relation to the respondent’s counter claim as necessary, later in these reasons.
Burden of proof
Under Section 51A of the Trade Practices Act, the onus falls upon the respondents to prove the reasonableness of any representations as to future matters. As has been indicated during the case, and of course during submissions, this is not an issue in this case. The real issue and in fact the only issue upon which determination turns, is whether or not the representations were made by the second respondent. The onus in relation to proving same, is one which falls upon the applicants.
I was addressed at some length in relation to the standard of proof which should apply in relation to this matter, particularly in light of the fact, that in this case, the Court is being asked to make findings with regard to the conduct of the second respondent and specifically, whether that conduct was deliberately deceitful. In that regard, it is apparent that all parties acknowledge that the intention of the respondents at all times, was for there to be a food court in the shopping centre, the subject of these proceedings.
What the Court is being asked to find therefore is that the second respondent, knowing at all times that a food court was to be in the shopping centre, blatantly and deliberately lied to the second applicant, Mr Viellaris, with a view to inducing him fraudulently to enter into the lease agreement. As a result of this situation arising there is a concern as to the standard of proof to apply.
In a civil case, if a party alleges conduct which, if proved, would constitute a breach of the criminal law, the party alleging the conduct, is not put to proof of that conduct beyond reasonable doubt. This issue was explored at length by the High Court in Briginshaw v Briginshaw (1938) 60 CLR 336, however at page 361 of the decision the High Court said:
“[citing Starke’s Law of Evidence] ‘But even where the contest is as to civil rights only, a mere preponderance of evidence, such as would induce a jury to incline to the one side rather than the other, is frequently insufficient. It would be so in all cases where it fell short of fully disproving a legal right once admitted or established, or of rebutting a presumption of law’. This mode of stating the rule for civil issues appears to acknowledge that the degree of satisfaction demanded may depend rather on the nature of the issue. In the course of a discussion of the matter containing no less wisdom than learning, Professor Wigmore says:-
‘In civil cases it should be enough to say that the extreme caution and the unusual positiveness of persuasion required in criminal cases do not obtain. But it is customary to go further, and here also to attempt to define in words the quality of persuasion necessary. It is said to be that state of mind in which there is felt to be a ‘preponderance of evidence’ in favour of the demandant’s proposition. Here, too, moreover, this simple and suggestive phrase ahs not been allowed to suffice; and in many precedents sundry other phrases – ‘satisfied’, ‘convinced’, and the like – have been put forward as equivalents, and their propriety as a form of words discussed and sanctioned or disapproved, with much waste of judicial effort’ (Wigmore on Evidence, 2nd ed. (1923), vol. V., sec.2498).
It is evident that Professor Wigmore countenances as much flexibility in the statement and application of the civil requirement as did Mr Starkie. The truth is that, when the law requires the proof of any fact, the tribunal must feel and actual persuasion of its occurrence of existence before is can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced bye inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on the materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency.”
These principles apply to actions for civil remedies under the Trade Practices Act. In The Heating Centre Pty Ltd v Trade Practices Commission (1986) 9 FCR 153 at 159-160, Mr Justice Pincus said:
“Whatever may be the reason for the distinction, the position is that the Act clearly characterises proceedings under s 76 as civil: see s 78 and contrast with s 79, while equally clearly characterising proceedings for a penalty in respect of a breach of Pt V of the Act as criminal proceedings. In so doing, Parliament must be taken to have intended that the court would apply the respective standards of proof applicable to each category. It is, of course, an attribute of civil proceedings that the necessary facts must be proved on the balance of probabilities, but, of course, taking into account the gravity of the matters alleged”. Bringinshaw v Briginshaw (1938) 60 CLR 336; [1938 ALR 334, 12 ALJ 100; Helton v Allen (1940) 63 CLR 691.
Accordingly, where allegations of the nature of fraudulent or deceitful conduct are concerned, there must be reasonable satisfaction of the Court, as to the allegations. As was indicated in Briginshaw however, this should not be produced by in-exact proofs, indefinite testimony or indirect references. Mr Justice Pincus in The Heating Centre Pty Ltd v The Trade Practices Commission (supra) referred to proof on the balance of probabilities but that there must be consideration of the “gravity of the matters alleged”.
In this case I am satisfied that the Briginshaw principles should be applied such that there is a significant onus that falls upon the applicants, in relation to the proof of same.
The evidence
I now come to the witnesses and to the evidence given by them. To a very significant degree, the only direct evidence in relation to the alleged representations made by the second respondent is that of the second applicant, Mr Viellaris, Mr Pervan and in a peripheral way at least, the evidence of Mr Millward. Countering that of course is the evidence of the second respondent Mr Buljubasich and the evidence of his wife.
A number of other witnesses were however called in relation to the proceedings and in relation to their evidence I would generally think that it was of little assistance in relation to the final determination of these proceedings.
Paul Nicholas Tsakissiris is a certified practising accountant and acts on behalf of the applicants. His evidence was non-contentious and did not, to any real extent, take the matter very far. He had given evidence by way of exhibits to his affidavit of the profit and loss statements for Yongala Holdings. He confirmed that he was not able to recall whether he had been given invoices for expenses, or simply cheque butts and statements, such that he was unable to absolutely specify that the matters referred to in the profit and loss statements, related only to the operation of the restaurant.
Evidence also was called from Alfred Anthony Strano and John Gerard Strano. Their evidence was peripheral, in the extreme. There were objections taken in relation to the affidavits filed by them however, their evidence was allowed to be relied upon. Both of these witnesses indicated that they knew the second applicant Mr Viellaris and knew that he other business interests, within Innisfail. They were unable however, to give any evidence in relation to any representations allegedly made by the second respondent. They both were able, to varying degrees, to give some confirmation that in the period from about 1999 through to 2001 there was some down turn in the economy, at least in the Innisfail area. Mr Alfred Strano said in response to a series of questions relating to the economic health of the Innisfail area culminating in the question
“I suggest to you that the general economic health of Innisfail was going downwards in the period 1999 through to about 2001/2002?….maybe a little bit, yes.”
John Strano was less pessimistic in response to similar questioning but indicated that he would not suggest that there was a general economic downturn but rather said
“Well I wouldn’t say a downturn. It was pretty stable, not booming.”
Little can be gained from the evidence of these witnesses other than the indication of an economic marketplace, which was at best stable in the period 1999 to 2001/2002 and at worst, going downwards.
Mrs Julie Albina Viellaris was called to give evidence. An objection was taken in relation to an affidavit by the witness and as a result of the objection, the matter was not pressed in relation to reliance upon the affidavit but rather, Mrs Viellaris gave some short oral evidence. It was peripheral to the matters really for determination before this Court though she did make some references to conversations held with the second respondent’s wife, Mrs Buljubasich. These discussions apparently related to issues in relation to some of the furniture items remaining outside the store and also concerns that Mrs Viellaris said she had in relation to the lift not working. Of significance however was the fact that Mrs Vielleris indicated that she did not make any personal complaints about the opening of other businesses in the food court. Her response to her own Counsels questioning in relation to same was
“No, George did that.”
In cross-examination however, Mrs Viellaris indicated in relation to the lift, that the enquires related to the fixing of the lift. There was not any suggestion in the evidence of Mrs Viellaris, that there was a requirement for the lift to be functioning as part of the arrangements, associated with the leasing of the restaurant.
Counsel for the respondents submitted strongly that the importance of Mrs Viellaris evidence was not what she said, but rather what she didn’t say. It was submitted that Mrs Viellaris was in attendance at the meeting, which apparently took place on 4 March 1998, which meeting culminated in a document, which was known as “the agreement for lease”. Mrs Viellaris makes no reference what-so-ever in her evidence nor was she questioned about there being an anchor tenant or in fact that that anchor tenant was specified to be Woolworths. Mr Viellaris and Mr Pervan however, say that such things were mentioned on
4 March 1998.
Counsel for the respondents submit, that if Mrs Viellaris was in a position to give evidence about the representations, then she would have done so and that because she did not give such evidence, the rule in Jones v Dunkel (1959) 101 CLR 298 should be applied. In that case Windeyar J said at page 321 the following:
“As Wigmore points out (Evidence 3rd ed. (1940) vol.2, ss.289, 290, pp. 171-180), exactly the same principles apply when a party, who is capable of testifying, fails to give evidence as in a case where any other available witness is not called. Unless a party’s failure to give evidence be explained, it may lead rationally to an inference that his evidence would not help his case. These considerations have been discussed or applied in the following among other cases in Australian Courts:”
The rule, if you like applies further, in that it relates not only to a failure to call a witness in relation to evidence, but also relates to a failure by a witness who was called to give evidence on a matter upon, which he or she should be able to give evidence. Counsel for the respondents says that an inference should be drawn that Mrs Viellaris did not give evidence about the alleged representation, because she was not in a position to do so, or more specifically, that the representation was not made.
The three witnesses, pivotal to the applicants case are, of course, the second respondent Mr George Viellaris and the real estate agent, George Pervan and Mark Vincent Millward.
Mr Pervan was not an impressive witness. His evidence commenced to be given in what might be described a pleasant demeanour but within a few questions, the witness became aggressive and agitated. This situation continued for virtually the entirety of cross-examination by Counsel for the respondents. Not only was the witness aggressive however, but he was also vague and imprecise in much of the evidence he gave. I gained the distinct impression that he was not a truthful witness but rather one determined to assist the applicants, to act contrary to the interests of the respondents and as was submitted by Counsel for the respondents
“to say one thing and to belligerently stick to that no matter what was put to him.”
There were clear inconsistencies in the evidence of Mr Pervan. In particular, he said in his affidavit that Mr Buljubasich had indicated that Woolworths were to be the anchor tenant, but in a statement made 10 July 2002, which was of course closer in time to the event than the affidavit, he indicated that Mr Buljubasich had said that Woolworths were looking seriously at moving in as the main tenant but if not, that another anchor tenant was lined up.
There is clearly a significant difference between what is sworn in the affidavit and what is indicated in the statement. More telling however, is the fact that Mr Pervan refused to accept that that was the case. He became angry and agitated and I gained the distinct impression that he found himself caught out, in what was in reality a fairly minor in-consistency, but rather than make the concession he became belligerent and I think, untruthful. In that regard for example he specifically referred to having diaries which supported his evidence but those diaries were never produced. This is notwithstanding the fact, that Mr Pervan was specifically reminded, following the giving of his evidence, that if he found his diary he should bring it to the Court. It was never produced.
Mr Pervan was an unreliable witness. He made repeated references to meetings between he, Mr Viellaris and Mr Buljubasich, prior to the meeting of 4 March 1998. Mr Buljubasich denied that such meetings occurred and it is submitted that that evidence is consistent with the document exhibited to the affidavit of the second respondent, Mr Buljubasich and marked as “MB1”. That document is headed “re: Lease of Grand Central.” It goes on, almost as an introduction of the second applicants to the second respondent. It is submitted on the part of the respondents, that if there had been meetings prior to the creation of the document "MB1”, then there would have been discussions relating to the business acumen of Mr and Mrs Viellaris and the terms of the offer, that they put forward.
There are two possibilities in relation to Mr Pervan’s evidence. The first is, that he was doing his best to be truthful but with the passing of time he was unable to recall much of the information, relating to the discussions. The second possibility is that Mr Pervan was simply an untruthful witness. It gives me no pleasure to find that the second of those possibilities is more likely to reflect the actual situation, in relation to these proceedings. Mr Pervan was an aggressive and agitated witness. He was evasive and without hesitation, I would find that he was untruthful in his evidence. He was uncooperative in the extreme and I could place no reliance upon that evidence.
Mark Vincent Millward gave evidence in relation to the proceedings. Though not a party to the negotiations relating to the establishment of the restaurant business by the first and second applicants his evidence was relied upon, because of a discussion Mr Millward said that he had, with the second respondent, in relation to food outlets. Mr Millward’s evidence was, that he raised with the second respondent, Mr Buljubasich, issues in relation to potential clientelle for the arcade and the means of drawing them into the shopping centre. Mr Millward says that there was discussion in relation to, the only hot food outlet being the restaurant, operated by the applicants.
There was a significant degree questioning about the time that this conversation took place, with Mr Millward saying that it occurred in the latter part of 1998 or January of 1999, whilst it was being suggested, on behalf of the respondents, that it took place in July 1999. The relevance of those dates, relates particularly to the position with regard to other food outlets, at the shopping centre.
In the end, I have come to the view that Mr Millward was doing his best, to be an honest witness in relation to this matter. I did gain the impression however, that he somewhat uncomfortable or confused in some of the evidence that he gave, and are more inclined to the view, that the evidence of Mrs Buljubasich, particularly in relation to the time of conversations and discussions, is more reliable. Mr Millward was not I thought, an untruthful witness, but rather one who, understandably, with the passing of time, had found himself specifically unable to recall exactly when discussions had or had not occurred. I was otherwise not much assisted by the evidence of Mr Millward.
The principal witness is, as I have indicated, George Arthur Viellaris. Mr Viellaris was simply an unimpressive witness. I gained the distinct impression, that Mr Viellaris would say what-ever he thought would assist his case and in fact, during cross-examination, I gained the impression that his evidence was formulated, “on the run”.
Mr Viellaris was questioned about a Public Need Submission which was provided by him to the licensing authorities, when applying for a liquor licence for the restaurant. The terms of the public needs submission were as follows:
1.a)Innisfail currently is lacking a Fine Restaurant. This venue is second to none in the town. Diners presently have to choose between hotels and clubs where it is almost impossible to escape the poker machine environment. However it is not only the venue that is needed by also the concept of dining. Many locals travel out of town to enjoy the successful trend of “THE ALLYOU CAN EAT BUFFETS”. After paying a set admission price diners can eat to their hearts content including the finest quality seafood’s, salads, roasts, hot and cold courses, desserts, fruits, tea and coffee. Alcoholic beverages will not be included in the set price. Waitresses will keep tables clean and table service will be available for alcoholic drinks.
b)As the alcohol will be a complimentary accompaniment to a spectacular buffet the health and social impact will not be an issue. Dress must be at least Neat and Tidy Casual to suit our Northern Lifestyle. Workwear, Thongs or Untidy Dress will be strictly forbidden.
2.a)Panpipe, background music or similar music suitable to dining will be the standard required. Lighting is ample with the backup of emergency lighting in case of power failures. I have had much experience in the security field and I have always found diplomacy works much better than aggressiveness. However I have the services of intelligent security personnel. Dispersal of patrons should not be of any concern as most diners will leave soon after their meal via the main entrance. The venue has complied with all the Health and Safety and Fire Brigade requirements. As the building is situated in the middle of Innisfail’s C.B.D. (about 100 metres from the Post Office) there is ample parking facilities and there will be no impact on Churches, Schools or Daycare Centres.
b)The Restaurant is presently part of an existing tavern and was originally a Hotel that has been in operation for many years. This question is probably more relevant to an Application of a new licence.
c)Once again the Licensed Premises are already in operation. It is merely a separation that is required.
What Mr Viellaris was describing was something entirely different in the Public Need Submission to what he says was to be provided at the shopping centre.
More particularly however, Mr Viellaris was questioned about the Public Need Submission, before it was shown to him. Mr Viellaris became somewhat agitated in answering the questions in relation to the public need submission and acknowledged, that he was prone to exaggeration. He said following a number of questions about the public needs submission the following
“well I may have exaggerated a bit to get the license”
It was then put to him that when he said that he had exaggerated a little bit that meant that he was telling something to a statutory authority that was simply not true. He was asked whether that was right and he responded
“yes, I will say that’s right”
Thereafter Mr Viellaris set out to draw some distinction between “a fine restaurant” and “fine dining”.
The distinction was not well made and I gained the distinct impression that, as with the licensing authority, where Mr Viellaris had exaggerated in his submissions, he had similarly, with the Court, exaggerated if not told outright untruth’s, in relation to his expectations of the restaurant within the centre and of the assurances given to him.
Mr Viellaris indicated, that whilst there were four representations pleaded in the amended claim, it was really only the case that two were very significant to him. Those were firstly that he was the only food outlet and secondly that Woolworths would be the anchor tenant. There is no reference whatsoever to either of these requirements, in any of the preliminary documentation that lead up to the lease or in fact, to the lease itself. This is not-withstanding the fact that, Mr Pervan was the person apparently attempting to facilitate between Mr Viellaris and Mr Buljubasich and he was an experienced businessman within the locality, as well as the fact that both Mr Viellaris and Mr Buljubasich were experienced businessman.
Mr Viellaris explained this by saying that it was not included, because he and the second respondent were men of their word. Clearly however, this was not a verbal agreement but one which specifically detailed, at length, the obligations and responsibilities that each had to the other, pursuant to the terms of the lease. Mr Viellaris suggesting that he did not wish to offend Mr Buljubasich, flies in the face of the fact that there were numerous notes/letters that passed between Mr Buljubasich and Mr Viellaris, as well as Mr Pervan and Mr Buljubasich. All of which indicated, that over and above any agreement, the dealings were of a business nature and that each party to the dealings wished to fully articulate their position in relation to the dealings.
Mr Viellaris’s contentions in relation to the representations and their significance to him but non-inclusion in the documentation are in my view fanciful and if not untruthful then certainly, a gross exaggeration.
It is submitted and I accept that there is a radical difference between what Mr Viellaris proposed to establish and what was to operate in the food court, of the shopping centre. Mr Viellaris in his submissions to the liquor licensing authorities indicated that Innisfail needed a fine restaurant, which would operate a spectacular buffet and would restrict entrance, to the restaurant. In the public needs submission, Mr Viellaris makes reference to:
“Dress must be at least Neat and Tidy Casual to suit out Northern Lifestyle. Workwear, Thongs or Untidy Dress will be strictly forbidden.”
Such an establishment would not be in competition with a fish and chip shop, Chinese takeaway and coffee shops. Mr Viellaris set out to convince the licensing authorities of the radically different nature of the business, that he sought to operate. Whether it were a fine restaurant or to provide fine dining it was entirely different to what would be contemplated as “fastfood”, through a food court.
I am far more inclined to the view that the business was to be one that would stand alone and not depend upon traffic brought in to the centre by an anchor tenant, such as Woolworths or any other major chain or to be in competition with the types of food outlets, which operated in the food court. The submission to the licence authority is telling, in that Mr Viellaris very clearly seeks to distinguish what he sets out to establish from anything else in Innisfail.
The Public Need Submission of itself is telling, in that in Mr Viellaris’ own words, be they exaggerated or not, he distinguishes what he intends to establish and operate, from not only anything else within the shopping centre, but in fact, from anything else within the Innisfail township.
The evidence that Mr Viellaris calls and seeks to rely upon, in relation to Woolworths being an anchor tenant is confused in the extreme. He says that this was a critical factor for him and was a representation made to him, by Mr Buljubasich. The statement, rather than the affidavit by Mr Pervan however, flies in the face of that and in any event the fact is that the lease was not signed until August 1998, whilst discussions were held in March of 1998. Some five months or more later, Woolworths had not established a presence at the shopping centre nor was there any indication that they would do so. Notwithstanding that, Mr Viellaris signed the lease on behalf of himself and the first applicant. One can only properly assume that this was because the involvement of Woolworths was not critical to the entry into the lease agreement, between the applicants and the respondents.
Concerns also arise in relation to items of correspondence, being letters that Mr Viellaris says he forwarded to the respondent’s. The evidence of the respondents is that such faxes were never received. Counsel for the respondent’s quite understandably says, that if these letters were faxed then the applicants should have been able to produce the originals. Only later was it indicated by Mr Viellaris that he had posted the originals such that he did not hold copies or the originals.
I found Mr Viellaris’s evidence in relation to the letters sent, simply unbelievable. He gave me the distinct impression when giving evidence in relation to the correspondence that again, it was evidence on the run and the statement with regard to lost correspondence either personally or by the solicitor acting for the applicant, simply did not ring true. The suggestions of correspondence forwarded and copies lost or misplaced are I would find, simply untruths and seemed to be designed in an attempt, albeit unsuccessfully, to strengthen the case or position of the applicants.
In the end I have come to the view that the evidence of Mr Viellaris is unreliable in the extreme, if not down right untruthful. Counsel for the applicants, at the commencement of submissions put forward a rhetorical question generally in these terms
“why would someone enter into a lease at market rent which provided for 10% annual increases unless there was some good reason to do so?”
The response given to the rhetorical question, was that the good reason was exclusivity in food sales and an anchor tenant, to attract customers. Another obvious answer however, was that the applicants had embarked upon an enterprise, to set up a fine restaurant or a fine dining restaurant. It would not be in competition with the food court and would not be dependant upon traffic generated by an anchor tenant. Clearly there was a future expectation of a successful enterprise and for that reason the exclusivity of food distribution and the establishment of an anchor tenant, such as Woolworths, was not relevant in the leasing of the property. The suggestion of representations only arises at a later stage, when the business has failed and an excuse is being sought to avoid the obligations under the lease, both in relation to payments made and outstanding rental payments.
The applicants’ claim
The claim should be dismissed. There is no basis upon which the representation alleged to have been made by the second respondent could be found to have been proved. The evidence of the second applicant and of the witnesses called in support, failed to in any way to satisfy the onus of proof, that falls upon the applicants.
In that regard, I have not made comment in respect of the evidence of Mr and Mrs Buljubasich. In one respect there is little need to comment upon their evidence in that I am simply not satisfied that the obligations have been met in relation to satisfying me as to the representations allegedly made. However, it would be remiss of me not to indicate, that I specifically find that the evidence of Mr and Mrs Buljubasich was given frankly and I would find truthfully.
Both Mr and Mrs Buljubasich stuck me as being determined or hard business people, but also fair. They had entered into an agreement which was specified in the terms of the lease. It was entire in itself. I would not find that there were representations by the second respondent or in fact, by Mrs Buljubasich which could in anyway have been considered to have induced the applicants to enter into the lease agreement.
The applicant’s claim is dismissed.
The Respondents’ counter claim
The counter claim is for outstanding rent and damages. I have already found that the Court has jurisdiction to hear the counter claim. The counter claim is for $170,553.76. This sum is calculated in two parts. The first part relates to rental due up to the date of termination of the lease, 8 August 2002. The second part of the claim is for loss rental, from the time of termination until the expiry of the lease, which would have occurred on 31 May 2003, a period of approximately 10 months.
Clause 14.1 of the lease provides as follows:
“14.1 Default by Tenant
(1) Events of Default Right to Re-enter
If:(a)the Rent or any part of it is unpaid for seven (7) days after it has become due whether any formal or legal demand is made or not:
THEN subject to the Landlord giving notice under s.124 of the Property Law Act 1974 the Landlord or any person duly authorised by the Landlord may at any time on one (1) day’s written notice or without notice re-enter the whole or part of the Premises in the name of the whole and determine this Lease but without prejudice to the right of action or other remedy of the Landlord in respect of any antecedent breach of the Tenant’s covenants stipulations or agreements here contained or implied in this lease.
(2)Damages
If the Landlord determines this Lease under clause 14.1(1) the Landlord may recover from the Tenant in addition to damages and amounts recoverable apart from this clause:
(a)any Rent and Outgoings due but unpaid at the date of the determination;
(b)the amount by which the Rent and Outgoings between the date of determination and the date of expiry of this Lease by effluxion of time exceeds the rent and outgoings received or likely to be received from any other tenant to whom the Premises are relet or may be relet during that period;
(c)any other amount necessary to compensate the landlord as a result directly or indirectly of the Tenant’s default and the Landlord’s determination of this Lease including, for example:
(i) costs and expenses incurred in maintaining the Premises;
(ii)costs of recovering possession of the Premises;
(iii)expenses of reletting including necessary renovation or alteration of the Premises;
(iv)legal costs;
(v)real estate commission charges and fees.
For the purposes of para. (b) of this sub-clause, the onus of proving that the Premises are likely to be relet and the amount of the rent likely to be received is upon the Tenant. For the purposes of calculating the rent and Outgoings that would have been payable after the determination of the Lease and to the extent that the Rent and Outgoings that would have been payable cannot be established certainly, it will be assumed that the Rent and Outgoings would have increased annually by five per centum (5%) cumulative on each anniversary of the Date of Commencement.”
There is a contractual right therefore to liquated damages and Clause 14.1(2), specifically provides that the onus of proving that the premises are likely to be relet and the amount of rent likely to be received, falls upon the tenant. The applicant has taken no steps, nor provided any evidence what-so-ever in relation to the likelihood of reletting the property or the amount of rent, to be received. The fact is that the applicants here have failed to meet any of the requirements that arise pursuant to the lease. There is no evidence at all, to suggest that a tenant could have been found and there is no evidence of the rental for which the premises could have been let. Counsel for the respondents in fact suggest that there is some peripheral indications arising from the evidence of John Stranno, that there was a glut in the market and that similar premises were unable to be rented.
The obligation clearly arises with regard to payment of the counter claim.
There is also a claim for interest and Clause 15.5 of the lease provides:-
“the tenant will pay to the landlord interest on any rent or other monies which are in arrears calculated at the stipulated rate from the time of the rent or other monies respectively falling due to the date of payment”.
The stipulated rate defined in the lease is 5% higher than the prime rate of interest charged by the landlords bank from time to time. There however, is no evidence in relation to that particular aspect of the matter and therefore the proper rate should be calculated as 5% on the total amount of the counter claim. I have already found that the amount of the counter claim is due and owing in the sum of $170,553.76 from the date of expiry of the lease, namely 31 May 2003. The interest component to the date of judgment, 25 January 2005 is $14,109.44, a total of $184,663.20. The Orders of the Court will be
(1)The application be dismissed.
(2)Judgement for the Respondents on the counter claim and interest in the sum of $184,663.20.
(3)That the Applicant pay the Respondents’ costs as agreed and failing agreement to be taxed.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Coker FM
Associate:
Date: 25 February 2005
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